Tuesday, July 13, 2010

A Few Words on The Life and Death of Veteran Southern California Grocer Roger K. Hughes

[Editor's Note: Southern California food and grocery retailing pioneer Roger Hughes passed away on July 8. His funeral service is being held today. Fresh & Easy Buzz's 'The Insider' columnist, who knew Mr. Hughes, asked if he could devote his column this week to the life and death of grocer Roger Hughes. We agreed.]

The Insider: Heard on the Street

Funeral services for Roger K. Hughes, a veteran Southern California grocer, spokesman for the California supermarket industry, and all around good guy, are being held today in Southern California.

Mr. Hughes, 76, died Thursday, July 8 of cancer. He is survived by his wife, Katharine; four children; nine grandchildren; and one great-grandchild.

Roger Hughes, who served as chairman, president and CEO of Hughes Markets for many years, was a member of one of the pioneering food and grocery retailing families in Southern California.

In 1934 Roger Hughes' father, Joseph Hughes, went to work for the now gone Thriftmart grocery chain in New Jersey. He stayed with Thriftmart for 18 years, leaving in 1952 to seek his fortune in Southern California, where starting with one store he laid the foundation for what became one of the region's largest family-owned supermarket chains - Hughes Markets.

in 1952, Joseph Hughes opened a Thriftmart franchise grocery store in the Southern California city of Studio City. Over the following two years he opened two more Thriftmart stores, one in Van Nuys and another in Hollywood.

But it was the opening of his fourth store that would mark the beginning of the "Hughes" name in Southern California food and grocery retailing. That next store, which was located in Granada Hills, flew the Hughes Markets banner for the first time, instead of Thriftmart. Joseph Hughes severed his ties to Thriftmart, renamed the other three stores Hughes Markets, and went out on his own as a true independent grocer.

Roger Hughes went to work for his father while in high school. By the time he was in his third year at Southern California's Loyola High School he was managing the liquor department in the Studio City Hughes Market's store.

Roger Hughes initially didn't want to join the family grocery business, he wanted to be a teacher. Hughes enrolled at Glendale College for a while and then joined the U.S. Navy, serving for two years.

Back home from the Navy, Roger Hughes enrolled in the University of Southern California (USC) and graduated four years later in the early 1960's.

Following graduation from USC, Roger Hughes wet to work at Hughes Markets, becoming manager of the store in Sherman Oaks in 1962. Three years later he talked his father into granting him franchise ownership of the Sherman Oaks store (like father like son), which he operated that way for many years; in fact until his father died in 1982. When Joseph Hughes died, Hughes Markets was a multi-store grocery chain with about $400 million in annual sales.

In 1982 Roger Hughes took over as president and CEO of Hughes Markets. A mere seven years later (by the end of the 1980's) the Southern California grocery chain, known for its focus on the basics, high level of customer service, and innovations like bringing back service fish and meat departments, had doubled in size - to 45 stores - and more than doubled in sales volume to nearly $900 million annually.

In 1990 Hughes Markets, which remained owned 100% by the Hughes family, hit the $1 billion in annual sales milestone, with 52 stores.

The chain, which had become the largest family-owned supermarket chain in Southern California because of acquisitions some years prior of formerly family-owned Ralphs and Vons, continued to grow in the 1990's, although in the measured and controlled way which was a hallmark of Roger Hughes' approach to building the business.

From 1992 -to- 1996 Hughes Markets opened six new stores (to total 58). And in 1993 the family-owned chain debuted a new office and warehouse complex in the Southern California city of Irwindale The new office complex/distribution center was comprised of three buildings: A 36,000 square-foot office building, a 137,000-square-foot facility for fresh produce, meat and deli, and a 443,000 square-foot distribution center for dry grocery, general merchandise, and liquor.

But in November of 1996 Roger Hughes decided to sell the nearly half-century old family supermarket business, which was doing about $1.3 billion in annual sales, to Quality Food Centers, Inc. (QFC), a then 64-store supermarket chain based in Seattle, Washington, for $360 million in cash.

The sale marked a milestone in the Southern California supermarket industry because Hughes Markets was the last remaining major, family-owned grocery chain in the region.

Under the terms of the acquisition-merger agreement, Roger Hughes gave up his title as chairman but retained his president and CEO title. The agreement also stated that his management staff and all Hughes Markets' employees would remain in place, with Hughes Markets and QFC to operate as separate business units under a holding company formed by QFC. This was a stipulation Roger Hughes insisted on in order for the deal to happen.

At the time here's (paraphrase) what Roger Hughes said about the deal: The merger allows us to keep our people in place and provided funds for future expansion. One of the family's concerns with any sale was that we didn't want to disturb the employees, and we were able to consummate this and have all our people remain in place. Once the merger is completed, we'll have more financial clout and we'll be in a better position to grow.

Roger Hughes stayed on post-merger as president and CEO of the chain. But when QFC and Ralphs were acquired just one year later in 1997 by Fred Meyer Inc. (part of Southern California-based supermarket industry veteran and investor [Yucaipa Company] Ron Burkle's roll up deal in the 1990's) he retired. Not long after, the Hughes Market banner was replaced in Southern California with the Ralphs banner.

But Roger Hughes didn't spend much time in retirement; less than two years.

In 1999 he and three former members of his executive team at the old Hughes Markets chain - Mark Oerum, David Wolff and Steve Strickler - founded HOWS Markets in Southern California. The HOWS name is an acronym of the last names of the four founders/owners: Roger Hughes, Mark Oerum, Dave Wolff, and Steve Stricker.

HOWS is an upscale supermarket format but embraces most of the fundamentals, like the focus on customer service, of the old Hughes Markets chain and culture. (see here.) There are currently four HOWS' stores operating in Southern California. There were five units but the grocer closed its store in North Hollywood earlier this year because it was underperforming.

During his about 56-years (45 at Hughes Markets and 11 involved with HOWS) in the grocery business in Southern California, Roger Hughes, who was always ready with a friendly smile, also was a spokesman for the industry in the Golden State. He was actively involved with both the California Grocers Association (CGA), including serving a term as CGA Board Chair, and the Western Association of Food Chains, which he was president of in 1995, for decades.

Among his contributions to both trade organizations included frequent, and substantial, donations to scholarship funds which help students who are sons and daughters of people who work in the California food and grocery retailing industry.

Roger Hughes is one of just a handful of California supermarket industry executives who have Legacy Scholarship's named after them by the CGA (you can learn more about the program here.)

In the mid-1980's -to- early -1990's Roger Hughes often partnered with fellow CGA board member Chuck Collings, the former president and CEO of Sacramento, California-based Raley's Supermarkets, to speak out to the media and public in California and nationally on issues important to grocers and consumers alike, as well as to lobby state legislators in Sacramento on issues of concern to grocers.

It was in this roll, a new one for Hughes but one he took to well because of his affability, where many who knew him well say he was able to differentiate himself from his father, who was much more of a private man, both as a grocer and personally. In fact, Joseph Hughes prided himself on never speaking to the press, and not letting employees do so either, a practice Roger Hughes changed a few years after he took over as CEO and Chairman, during the entire time he ran Hughes Markets.

The death of Roger Hughes in many ways marks the end of an era in the Southern California food and grocery retailing industry.

For example, the two major supermarket chains today in Southern California - Ralphs and Vons - like Hughes Markets, have their origins in being founded by entrepreneurs who built them up into substantial chains before selling them to publicly-held grocers.

Roger Hughes was part of that groundbreaking era in Southern California grocery retailing, which saw until not that long ago a dominance by family-owned grocers. The independent grocer segment is still alive and well in Southern California though, thanks in-part to the legacy Roger Hughes helped to build.

There's a certain poetry to Roger Hughes' career as a grocer in that after running a $1 billion-plus a year supermarket chain for many years, just two years after retiring, he couldn't wait to get back into the business as an independent, starting HOWES Markets, in which he put up a substantial chunk of his own money to get started. He also loved spending time in the HOWS stores, until health prevented him from doing so some years ago.

Roger Hughes' returning to the business as an entrepreneurial independent grocer recalls the time when as a young man he convinced his father to let him own and operate the Sherman Oaks Hughes Markets' store as a franchise - hence that poetry. It also helps explain why he operated the store as an owner for so many years - being an entrepreneur was in his blood and spirit - even though as the son of the chain's owner and CEO he didn't have to.

In closing, if you work in the grocery business, in Southern California or elsewhere - or even if you don't - join me in taking a moment of silence after reading this in honor of Roger Hughes: Grocer, husband, father, grandfather, entrepreneur, spokesman for the California supermarket industry, friend to many, and, last but far from least - a really good guy to all, regardless of their title, position in the industry - or station in life. RIP.

Recent Columns by 'The Insider'

~June 27, 2010: The Insider: Will Tesco Acquire Supervalu, Inc. and Change its 'Fresh & Easy' Game in America?

~June 12, 2010: Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

~May 20, 2010: Welcome to Discountopia USA

~April 29, 2010: Heard on the Street: There's Something About Albertsons ... In Southern California

[Editors Note: We made a correction on July 14 regarding former Raley's President Chuck Collings.]


Anonymous said...

What was left out of your column regarding Roger Hughes is that when he sold Hughes Markets to QFC, he had a verbal agreement from the QFC people that they would leave Hughes Markets intact and not sell it for several years, but they broke that agreement and sold it about a year later (they had actually been "shopping" Hughes to several other buyers well before that). Roger was "hoodwinked" by Dan Kourkoumelis and the QFC people into believing that they would keep their word, unfortunately Roger didn't write it into the contract, and as they say, the rest is history....

Anonymous said...

As a former Hughes employee, that is exactly what happened and it was such a shocker and dissatisfier. I left there not too long after. It was funny though, because the QFC people came out and assured us of nothing changing...